Tracking Glenn Greenberg's Brave Warrior Advisors Portfolio - Q3 2016 Update

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Includes: AR, AXTA, BAC, BAM, BBU, CMCSA, CMPR, HAL, HCA, JPM, LBTYK, LILA, LILAK, PRI, SCHW, ST, T, TDW
by: John Vincent

Summary

Glenn Greenberg’s US long portfolio increased from $1.79B to $2.07B this quarter.

HCA Holdings and Sensata Technologies were added while dropping Halliburton during the quarter.

The largest three positions are Charles Schwab, JPMorgan Chase & warrants, and Liberty Global and they add up to ~41% of the portfolio.

This article is part of a series that provides an ongoing analysis of the changes made to Glenn Greenberg's US stock portfolio on a quarterly basis. It is based on Greenberg's regulatory 13F Form filed on 11/14/2016. Please visit our Tracking Glenn Greenberg's Brave Warrior Advisors Portfolio series to get an idea of his investment philosophy and our previous update for the fund's moves during Q2 2016.

This quarter, Greenberg's US long portfolio increased ~16% from $1.79B to $2.07B. The top three holdings represent ~41% of the portfolio while the top five is at ~64%. The largest position is Charles Schwab which was first purchased in Q3 2012 and now accounts for ~14% of the portfolio.

Stake Disposals:

Halliburton (NYSE:HAL): The 4.10% of the US long portfolio HAL stake was first purchased in Q4 2014 at prices between $38 and $64.50. It was increased by one-third the following quarter at prices between $38 and $45. Q3 2015 saw a ~25% further increase at prices between $33.50 and $43.50. Last quarter saw a huge ~75% reduction at prices between $34 and $46 and the disposal this quarter was at prices between $41 and $47. The stock currently trades at $48.76.

Note: Greenberg had a previous very successful round-trip with HAL: It was a large 9.70% of the US long portfolio stake in Q1 2014. That position was established in Q1 2013 at prices between $34.50 and $43.50 and was increased by roughly two times in Q2 2013 at prices between $37 and $45.50. The entire stake was eliminated over the following two quarters at prices between $57 and $74.

Brookfield Business Partners (NYSE:BBU): BBU was a minutely small stake established last quarter and disposed of this quarter. It came about as a result of the spinoff of BBU from Brookfield Asset Management (NYSE:BAM) in June. Brave Warrior had around 7M shares of BAM for which they received BBU shares in the ratio 50:1.

New Stakes:

HCA Holdings (NYSE:HCA): HCA is a large ~9% portfolio stake established this quarter at prices between $74 and $81. The stock currently trades just below that range at $73.54.

Sensata Technologies (NYSE:ST): ST is a fairly large ~6% portfolio position purchased this quarter at prices between $34.50 and $40 and the stock currently goes for $36.67.

Note: For investors attempting to follow Brave Warrior, HCA & ST are good options to consider for further research.

Stake Decreases:

Antero Resources (NYSE:AR): AR is a large (top five) ~12% of the US long portfolio position established in Q2 2015 at prices between $34 and $45.50 and increased by ~84% the following quarter at prices between $20 and $34.50. Q1 2016 saw another ~21% increase at prices between $19.50 and $28. Last quarter saw a whopping 121% further increase at prices between $24.50 and $30. The stock currently trades at $24.99. There was a marginal trimming this quarter.

Axalta Coating Systems (NYSE:AXTA): AXTA is ~4% of the portfolio position. It was established in Q1 2016 at prices between $21 and $29. Last quarter saw a ~37% reduction at prices between $25 and $30.50. The stock currently trades at $26.15. This quarter saw a very minor reduction.

Brookfield Asset Management : BAM is a large (top five) ~11% of the US long portfolio stake established in Q2 2015 at prices between $34 and $38.50 and increased by ~57% the following quarter at prices between $29.50 and $36. Q1 2016 saw an about turn: ~23% reduction at prices between $27 and $35. The stock currently trades at $33.07. This quarter saw a ~8% trimming.

Note: The prices quoted above are adjusted for the spinoff of Brookfield Business Partners that closed in June.

Cimpress (NASDAQ:CMPR) previously VistaPrint: CMPR is a large ~9% of the US long portfolio position. The original stake consisted of ~2M shares purchased in Q4 2011 at prices between $27 and $36. H1 2014 saw a ~40% increase at prices between $37 and $55. Q4 2014 saw an about-turn as ~38% of the position was sold at prices between $52.50 and $76. H1 2015 had also seen a ~20% reduction at prices between $79.50 and $91.

In Q4 2015, the pattern reversed again: ~79% increase at prices between $64.50 and $84.50. H1 2016 had seen a combined ~40% selling at prices between $69 and $100. That was followed with another ~28% reduction this quarter at prices between $91 and $103. The stock currently trades at $85.61. Brave Warrior is harvesting gains.

JPMorgan Chase & Co. (NYSE:JPM) & JPMorgan WTS: JPM is a large ~9% of the US long portfolio stake established in Q3 2014 at prices between $55.50 and $61.50 and increased by ~14% in the following quarter at prices between $55 and $63. The stake was again increased by ~16% in Q1 2015 at prices between $54.50 and $62.50. Last quarter saw an about turn: ~40% reduction at prices between $57 and $66. The stock currently trades at $77.40. The TARP warrant (Strike 42.42, 10/28/2018 Expiry, Yahoo Ticker: JPM-WT) stake was established in Q1 2015 and increased by ~44% the following quarter. Q3 2015 saw a further ~20% increase. The warrant currently trades at $35.65 which implies a nominal leverage of 2.17. There was a ~4% trimming this quarter in both the common and the warrants.

Liberty Global plc (NASDAQ:LBTYK): LBTYK is a large (top three) ~13% of the portfolio stake purchased in Q1 2016 at prices between $30 and $41 and increased by ~53% last quarter at prices between $26.50 and $38.50. The stock is now at $31.13. This quarter saw marginal trimming.

Primerica Inc. (NYSE:PRI): PRI is 7% of the US long portfolio position established in Q3 2011 at much lower prices. Q4 2014 saw a ~30% reduction at prices between $46 and $55.50 and the following quarter saw a further ~10% reduction at prices between $49.50 and $55. In Q1 2015, the pattern reversed: ~28% increase at prices between $44 and $51 and that was followed by a ~15% increase in Q3 2015 at prices between $41 and $46. This quarter saw a ~17% selling at prices between $50 and $59. The stock currently trades at $68.80. Greenberg controls ~6% of the business.

Charles Schwab Corporation (NYSE:SCHW): The SCHW stake was first purchased in Q3 2012. Close to 6M shares were purchased at prices between $12.50 and $14.50. The position has since been built up to the current stake of ~9.2M shares (14% of the US long portfolio - largest 13F stake currently). The stock is now at $36.70. Last three quarters have seen minor selling. Greenberg is sitting on huge gains.

Stake Increases:

Liberty Global LiLac (NASDAQ:LILA) (NASDAQ:LILAK): LILA was a minutely small stake established last quarter. The position was built up to a ~1% portfolio stake this quarter.

Kept Steady:

The following very small positions (less than 0.1% of the US long portfolio each) were kept steady in the quarter: AT&T Inc. (NYSE:T), Bank of America (NYSE:BAC), Comcast Corporation (NASDAQ:CMCSA), and Tidewater Inc. (NYSE:TDW).

The spreadsheet below highlights changes to Greenberg's US stock holdings in Q3 2016:

Click to enlarge

Disclosure: I am/we are long BAC.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.